New Construction Investment

[Dallin Gary Patterson]

I need some sound advice quick! I should have reached out to you all who know more about the real estate business than I do BEFORE I entered into a contract on a new build, but if anyone advises me to get out of it, I certainly will. 

Background: I'm late into the game. For the past couple years I have been wanting to get into real estate. I read Rich Dad Poor Dad two years ago and was convinced that getting into the real estate business was my way out of being a slave to the industry I have been in for the last 10 years. My main reasoning to get out of this industry is to be home more. I deploy a couple times a year and am missing out on watching my boys grow up. I have tried to finish up my engineering degree online while deployed, but after reading RDPR (again a second time last year that made me even more convinced to get into real estate) and several other financial books, I realized that my degree would just lead me to being a slave to another industry. I have been away from my family for too long to want to devote my time Mon-Fri to a company that will only match what I put into my 401(k). I want the quality time, sooner than later, that comes from financial freedom to enjoy the rest of my kids' youth. 

I discovered BiggerPockets and its vision for financial freedom after reading Brandon Turner's books, "The Book on Rental Property Investing" & "The Book on Investing in Real Estate..." I have loved all that BiggerPockets has to offer and have been trying to soak up all I can. In my search for my second property, my wife decided she didn't want to invest in a used home and house-hack it for 3-5 years. Instead she wanted to build a new home. One of her reasons was that it would provide us time to continue to spruce up our current home for prep into the rental world. Other reasons were to save up to put money down on the home and to pay down debt, but her main reason was to have the home design and features that she has wanted from the beginning instead of making those modifications in another home.

My current income and budget allow me to comfortably own a home worth $180k, while stretching it thin up to $330k (according to realtor.com). That said, my wife got me to sign a contract recently to build a 2100sqft, new home with a base price of $270k. Of course, upgrades will add an extra $20k-30k. I haven't felt good about it, but have told myself that as long as she is happy, I will be happy. Plus, she won't have to worry about moving anywhere for the next 10-15 years, minimum.

BUT, will it truly be worth the investment? Will we be able to make more than the amount we're putting into it - down payment and interest included? I haven't been able to find any blogs or forums offering advice about this dilemma. I would rather follow the BRRRR game plan since I can find plenty of info on that.

Thank you so much to anyone who reads through this, and even greater thanks to anyone who responds.

V/R

-Dallin Patterson